Taxpayer to foot £25m bill for ‘shoddily treated’ Comet staff

Thousands of former Comet workers were in line for a share of a multimillion-pound payout after an employment tribunal ruling relating to the failure to consult them over their redundancies.

Lawyers for the largest group of claimants said the collapse of the electrical retailer in 2012 was “one of the more regrettable episodes of British corporate history” and “simply an old-fashioned corporate raid”.

They said workers were “lied to, misinformed and treated with very little dignity or respect whilst Comet’s owners extracted the maximum value from the business”.

At head offices in Hull – where the company was founded in 1933 by entrepreneur George Hollingbery – and Rickmansworth, workers attended a consultation meeting in the morning where no mention was made of redundancies, only to find that their jobs had gone that afternoon.

Under employment law, compensation will not be provided by Comet’s owners, with the taxpayer footing the bill instead.

The Needle Partnership, which represented 275 of the more than 2,000 former workers involved in the case, said that the tribunal in Leeds had revealed “a number of concerning details” about the background to the administration.

Comet’s collapse led to 6,889 employees being made redundant.

The Insolvency Service has launched a fact-finding inquiry into the episode.

The tribunal ruling will see more than £7m paid out of taxpayer funds, with former members of staff entitled to a maximum of eight weeks’ pay worth up to £450 a month. If the judgement is extended to include all ex-employees the figure could be £25m.

Victoria Robertson, employment partner of the Needle Partnership, said many staff had struggled to find another job and had suffered financially, adding: “We are very pleased with this outcome.”

The collapse of the firm was one of the biggest high street failures since the demise of Woolworths in 2008.

In December 2012, administrator Deloitte said it had failed to find a buyer for the company or any of its shops.

With insufficient funds raised from the winding down of the chain, it fell to the Government’s Redundancy Payments Service to meet £23.2m of outstanding redundancy pay, accrued holiday pay and pay in lieu of notice.

Deloitte was paid £5m in fees and retail consultants involved in store management and closures were paid £7.2m, Needle said.

Yesterday administrator Deloitte insisted the company, its advisers, and the Comet management team had provided the “best possible consultation to employees.” It said: “It is disappointing that the tribunal has found against the company. The Comet management team, administrators from Deloitte and our advisers worked tremendously hard under very challenging circumstances to provide the best possible consultation to the employees.

“Comet Group Limited made significant efforts to consult with its nearly 7,000 employees across more than 250 sites during the administration, whilst a purchaser for the business was sought.

“Regrettably, it proved impossible to find a purchaser willing to save the business and all the employees ultimately had to be made redundant.”